Another screeching U-turn on EVs! Now Hertz halts deal to buy 50,000 electric Polestars but agrees not to sell the 13,000 it has bought (to avoid a fire sale tanking secondhand values)

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Written By Maya Cantina
  • Hertz has paused plans to buy more than 50,000 electric cars from Polestar
  • It comes just weeks after it similarly announced it would sell 20,000 Teslas
  • Its CEO has suggested the dwindling value of EVs is harming the value of its fleet 

Hertz has backtracked on plans to buy 50,000 electric cars from Polestar – saying the rapidly falling price of EVs makes it too risky.

Echoing other companies – and increasing numbers of consumers – the rental giant is worried that it will buy electric cars only to find their price will slump soon after.

Firms that hold big fleets need to be sure that tens of thousands of cars won’t suddenly depreciate – as it can cost them millions of dollars.

Another factor driving the U-turn by Hertz is simply that many customers do not want to rent EVs for long trips, as they’re put off by range anxiety and a lack of charging stations.

In December, Hertz said it was selling tens of thousands of Teslas for the same reasons. 

In April 2022, Hertz  agreed to buy 65,000 cars from Polestar over five years. So far, it has bought 13,000 of them – but it doesn’t want the rest.

Rental company Hertz has backtracked on plans to buy 50,000 electric cars from EV maker Polestar. Pictured is a Polestar vehicle outside a rental office

Polestar's CEO, Thomas Ingenlath (pictured), told the Financial Times it allowed Hertz to back out of the deal last autumn

Polestar’s CEO, Thomas Ingenlath (pictured), told the Financial Times it allowed Hertz to back out of the deal last autumn

The move was part of Hertz’s strategy to ensure a quarter of its rental fleet would be electric by the end of 2024 – a target it has since abandoned.

Polestar’s CEO told the Financial Times it allowed Hertz to back out of the deal in the autumn of last year on the condition it agreed to hold the 13,000 cars it had already purchased for at least a year before selling them.

The EV maker is  worried about a ‘fire sale’ that could drastically reduce the value of used Polestar cars by flooding the market with significant supply.

Those fears seem warranted. Tesla suffered just that when, in January, Hertz announced it would sell 20,000 of its cars, some of which were listed on its used-vehicle site for as little as $17,000.

The average value of a used Tesla fell by more than $1,000 in the first half of January, DailyMail.com revealed last month.  

Hertz also offered Polestar the right of first refusal to buy the cars back should it want to get them out of its fleet, Polestar CEO Thomas Ingenlath said.

He told the Financial Times that Polestar had a ‘clear intention’ to revive its deal with Hertz and continue selling cars to the rental company in the future. 

Although it appears the deal was officially paused last year, news of the U-turn is only being reported this week. 

Today, Hertz announced its fourth-quarter earnings and blamed poor results on ‘headwinds’ with EVs.

Hertz CEO Stephen Scherr previously alluded to the issue during the company’s third-quarter earnings call in October.

‘Declines in the manufacturers’ suggested retail price for EVs over the course of 2023, driven primarily by Tesla, have driven the fair market value of our EVs lower as compared to last year, such that a salvage creates a larger loss and, therefore, greater burden,’ he said during the company’s third-quarter earnings call in October.

Over the last year, shares in Polestar have fallen 87 percent

Over the last year, shares in Polestar have fallen 87 percent

Meanwhile, shares in Hertz have fallen 50 percent. During Hertz's Q4 earnings call on Tuesday, its CEO blamed poor results on 'headwinds' caused by EVs

Meanwhile, shares in Hertz have fallen 50 percent. During Hertz’s Q4 earnings call on Tuesday, its CEO blamed poor results on ‘headwinds’ caused by EVs

Volvo bought Swedish company Polestar in 2015 and established it shortly after as a specialized EV brand. Since then, Volvo has manufactured Polestar models.

News of the abandonment of the deal comes days after it was reported that Volvo would stop funding Polestar, instead handing over responsibility to their parent company – the Chinese auto group Geely.

Geely has various other brands under its umbrella, including Lotus, Smart and Zeekr.

It also comes after Polestar announced plans to cut around 15 percent of its workforce and months after the struggling automakers started producing the Polestar 4.

Over the last year, shares in Polestar have fallen 87 percent. Hertz shares are down 50 percent.

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